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STOCKHOLDERS DEFICIENCY
 9 Months Ended
Mar. 31, 2025
STOCKHOLDERS DEFICIENCY  
STOCKHOLDERS DEFICIENCY

(13) STOCKHOLDERS’ DEFICIENCY

 

Series A Convertible Preferred Stock – As of March 31, 2025, 4,030 shares of Series A Convertible Preferred Stock were outstanding. Each share of Series A Convertible Preferred Stock is convertible at any time, at the option of the holder, into the number of shares of common stock equal to $100 divided by the Series A Conversion Price. As of March 31, 2025, the Series A Conversion Price was $60.33, and each share of Series A Convertible Preferred Stock is convertible into approximately 1.66 shares of common stock. The Series A Conversion Price is subject to adjustment, under certain circumstances, upon the sale or issuance of common stock for consideration per share less than either (i) the Series A Conversion Price in effect on the date of such sale or issuance, or (ii) the market price of the common stock as of the date of such sale or issuance. The Series A Conversion Price is also subject to adjustment upon the occurrence of a merger, reorganization, consolidation, reclassification, stock dividend or stock split which will result in an increase or decrease in the number of shares of common stock outstanding. Shares of Series A Convertible Preferred Stock have a preference in liquidation, including certain merger transactions, of $100 per share, or $403,000 in the aggregate as of March 31, 2025. Additionally, the Company may not pay a dividend or make any distribution to holders of any class of stock unless the Company first pays a special dividend or distribution of $100 per share to holders of the Series A Convertible Preferred Stock.

 

Financing Transactions – On February 10, 2025, the Company entered into definitive agreements with a single healthcare focused institutional investor for the purchase and sale of 4,688,000 shares of its common stock (or common stock equivalents in lieu thereof) in a registered direct offering (the “ February 2025 RD Offering”) at a purchase price of $1.00 per share.

 

The Company also agreed to issue to the same investor in a concurrent private placement warrants to purchase up to an aggregate of 4,688,000 shares of common stock (the “February 2025 Private Placement” and, together with the February 2025 RD Offering, the “February 2025 Offering”). The warrants issued in the concurrent February 2025 Private Placement will have an exercise price of $1.00 per share, will be exercisable 181 days after their issuance and will expire approximately five and a half years from the date of issuance.

 

The gross proceeds from the February 2025 Offering totaled $4,687,786, with net proceeds after deducting the placement agent fees and offering expenses amounting to $4,309,641. The Company intends to use the net proceeds from the Offering for general corporate purposes.  The Company paid the placement agents a cash fee equal to 7.0% of the aggregate gross proceeds of the February 2025 Offering.

 

On January 29, 2024, the Company entered into a securities purchase agreement (the “January 2024 Purchase Agreement”) to sell in a registered direct offering (the “January 2024 RD Offering”), an aggregate of 1,831,503 shares of common stock of the Company. Pursuant to the January 2024 Purchase Agreement, the Company issued to the investors in the January 2024 RD Offering unregistered warrants (the “January 2024 Private Warrants”) to purchase up to 1,831,503 shares of the Company’s common stock (the “January 2024 Private Warrant Shares”) in a concurrent private placement (the “Private Offering” and together with the January 2024 RD Offering, the “January 2024 Offering”). The shares of common stock and accompanying January 2024 Private Warrants were offered at a combined offering price of $5.46.

 

The January 2024 Private Warrants are exercisable on the six-month anniversary of the issuance date for a period of four years from the issuance date, at an exercise price equal to $5.46 per January 2024 Private Warrant Share. The January 2024 Private Warrants are exercisable for cash, or, solely during any period when a registration statement for the issuance or resale of the January 2024 Private Warrant Shares issuable upon exercise of the January 2024 Private Warrants to or by the holder of such January 2024 Private Warrants is not in effect, on a cashless basis.

The Company paid the placement agent a cash fee equal to 7.0% of the aggregate gross proceeds of the January 2024 Offering and for certain expenses and legal fees in connection with the January 2024 Offering. In addition, the Company also issued to the placement agent or its designees warrants (the “2024 Placement Agent Warrants”) to purchase up to 91,575 shares of the Company’s common stock (the “January 2024 Placement Agent Warrant Shares”) as part of the compensation payable to the placement agent. The January 2024 Placement Agent Warrants have substantially the same terms as the January 2024 Private Warrants, except that the January 2024 Placement Agent Warrants have an exercise price of $6.825 per share.

 

On March 14, 2024, the Company filed a registration statement on Form S-1 to register the January 2024 Private Warrants and the January 2024 Placement Agent Warrants, which registration statement was declared effective on March 28, 2024 and a prospectus was filed on the same date.

 

The gross proceeds from the January 2024 Offering totaled $10,000,006, with net proceeds from the January 2024 Offering, after deducting the placement agent fees and offering expenses, amounting to $9,224,056. The Company intends to use the net proceeds received from the January 2024 Offering for general working capital purposes.

 

On October 20, 2023, the Company entered into a securities purchase agreement (the “October 2023 Purchase Agreement”) with a certain institutional investor, to sell in a registered direct offering (the “October 2023 RD Offering”), an aggregate of (i) 1,325,000 shares of common stock (the “October 2023 Shares”), of the Company and (ii) pre-funded warrants (the “October 2023 Pre-Funded Warrants”) to purchase up to 1,033,491 shares of the Company’s common stock (the “October 2023 Pre-Funded Warrant Shares”). Pursuant to the October 2023 Purchase Agreement the Company also issued unregistered warrants (the “October 2023 Private Warrants”) to purchase up to 2,358,491 shares of the Company’s common stock (the “October 2023 Private Warrant Shares”) in a concurrent private placement (the “October 2023 Private Offering” and together with the October 2023 RD Offering, the “October 2023 Offering”). The October 2023 Shares and accompanying October 2023 Private Warrants were offered at a combined offering price of $2.12. The October 2023 Pre-Funded Warrants and accompanying October 2023 Private Warrants were offered at a combined offering price of $2.1199. The October 2023 Offering closed on October 24, 2023.

 

The October 2023 Private Warrants are exercisable on the six-month anniversary of issuance for a period of five and one-half years from the issuance date, at an exercise price equal to $2.12 per October 2023 Private Warrant Share. The October 2023 Private Warrants will be exercisable for cash, or, solely during any period when a registration statement for the issuance or resale of the October 2023 Private Warrant Shares issuable upon exercise of the October 2023 Private Warrants to or by the holder of such October 2023 Private Warrants is not in effect, on a cashless basis.

 

The October 2023 Pre-Funded Warrants had an exercise price of $0.0001 per October 2023 Pre-Funded Warrant Share, were exercisable upon issuance, and during the three months ended December 31, 2023, the institutional investor exercised the outstanding October 2023 Pre-Funded Warrants to purchase 1,033,491 shares of the Company’s common stock.

 

The net proceeds from the October 2023 Offering, after deducting the placement agent fees and offering expenses, were $4,573,948.

 

The placement agent warrants were issued to non-employees in exchange for services related to the offering are accounted for in accordance with ASC 718 which requires the fair value of the warrants to be recognized as an offering expense. The placement agent warrants contain certain contingent cash settlement features that are not probable of occurring and not within the control of the Company, therefore the placement agent warrants are classified out of permanent equity.

 

On January 24, 2024, the Company and warrant holders amended the terms of warrants related to the October 2023 financings. As a result, all liability classified warrants were reclassified to additional paid-in capital.

 

On February 11, 2025, the Company entered into a sales agreement (the “2025 Sales Agreement”) with A.G.P./Alliance Global Partners (“A.G.P.”), pursuant to which the Company may, from time to time, sell shares of the Company’s common stock at market prices by methods deemed to be an “at-the-market offering” as defined in Rule 415 promulgated under the Securities Act of 1933, as amended(the “Securities Act”). The 2025 Sales Agreement and related prospectus is limited to sales of up to an aggregate maximum of $6.0 million of shares of the Company’s common stock. The Company pays A.G.P. 3.0% of the gross proceeds as a commission.

For the three months ended March 31, 2025, a total of 413,400 shares of common stock were sold through A.G.P. under the 2025 Sales Agreement for net proceeds of $271,037 after payment of commission fees of $7,837 and other related expenses of $164,054.

 

During the three months ended March 31, 2025, the equity distribution agreement (the “2023 Equity Distribution Agreement”) that the Company entered into with Canaccord Genuity LLC (“Canaccord”) on April 12, 2023, was terminated.  The 2023 Equity Distribution Agreement and related prospectus was limited to sales, from time to time in an “at-the-market offering” (as defined in Rule 415 promulgated under the Securities Act), of up to an aggregate maximum $50.0 million of shares of the Company’s common stock. The Company paid Canaccord 3.0% of the gross proceeds as a commission.

 

Proceeds raised under the 2023 Equity Distribution Agreement are as follows:

 

 

 

Nine Months Ended 

March 31, 2024

 

 

Cumulative from

inception

 

 

 

Shares

 

 

Proceeds

 

 

Shares

 

 

Proceeds

 

Gross proceeds

 

 

217,027

 

 

$547,803

 

 

 

721,061

 

 

$1,744,542

 

Fees

 

 

-

 

 

 

(16,434)

 

 

-

 

 

 

(52,336)

Expenses

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(126,800)

Net proceeds

 

 

217,027

 

 

$531,369

 

 

 

721,061

 

 

$1,565,406

 

 

No proceeds were raised under the 2023 Equity Distribution Agreement during the three and nine months ended March 31, 2025.  

 

Stock Warrants – On December 13, 2024, the Company entered into a letter agreement (the “December 2024 Inducement Letter”) with a holder (the “December 2024 Exercising Holder”) of outstanding common stock purchase warrants that the Company issued on June 24, 2024, with an initial exercise price of $1.88, and October 24, 2023, with an initial exercise price of $2.12 (the “December 2024 Existing Warrants”). To induce the exercise of a portion of the December 2024 Existing Warrants by the December 2024 Exercising Holder, the Company agreed to adjust the exercise price of such portion of the December 2024 Existing Warrants to $0.875. Pursuant to the December 2024 Inducement Letter, the December 2024 Exercising Holder agreed to exercise, for cash, the December 2024 Existing Warrants to purchase an aggregate of 3,907,679 shares of common stock at the adjusted exercise price in exchange for the Company’s agreement to issue to the December 2024 Exercising Holder Series C common stock purchase warrants to purchase 3,907,679 shares of common stock (the “Series C Warrants”) and Series D common stock purchase warrants to purchase 1,953,839 shares of common stock (the “Series D Warrants” and together with the Series C Warrants, the “December 2024 Inducement Warrants,” and the shares issuable upon exercise of the December 2024 Inducement Warrants, the “December 2024 Inducement Warrant Shares”). The Company received aggregate gross proceeds of $3,419,219 from the exercise of the December 2024 Existing Warrants by the December 2024 Exercising Holder (the “December 2024 Warrant Inducement”). The incremental value of the December 2024 Warrant Inducement was recorded as an offering expense against the proceeds received in additional paid-in capital.

 

On June 20, 2024, the Company entered into a letter agreement (the “June 2024 Inducement Letter”) with a holder (the “June 2024 Exercising Holder”) of outstanding common stock purchase warrants that the Company issued on November 2, 2022, and October 24, 2023 (the “June 2024 Existing Warrants”). Pursuant to the June 2024 Inducement Letter, the June 2024 Exercising Holder agreed to exercise, for cash, June 2024 Existing Warrants to purchase, in the aggregate, 3,233,277 shares of common stock in exchange for the Company’s agreement to (i) lower the exercise price to $1.88 per share for the 3,233,277 June 2024 Existing Warrants being exercised pursuant to the June 2024 Inducement Letter and (ii) issue to the June 2024 Exercising Holder an aggregate of 4,849,915 warrants to purchase shares of common stock, comprised of Series A common stock purchase warrants to purchase 2,727,273 shares of common stock (the “June 2024 Series A Warrants”) and Series B common stock purchase warrants to purchase 2,122,642 (of which 1,624,201 shares of common stock are subject to stockholder approval) shares of common stock (the “June 2024 Series B Warrants” and together with the June 2024 Series A Warrants, the “June 2024 Inducement Warrants”). The Company received aggregate gross proceeds of $6,078,561 from the exercise of the June 2024 Existing Warrants by the June 2024 Exercising Holder (the “Warrant Inducement”). As part of the agreement, 1,443,277 shares of common stock were held in abeyance on behalf of the June 2024 Exercising Holder. During the three months ended March 31, 2025, at the request of the June 2024 Exercising Holder, 1,443,277 shares were released from abeyance. The incremental value of the June 2024 Warrant Inducement was recorded as an offering expense against the proceeds received in additional paid-in capital.

As of March 31, 2025, the Company had outstanding warrants for shares of common stock as follows:

 

 

 

Shares of Common

 

 

Exercise Price per

 

 

Latest Expiration

 

Description

 

Stock

 

 

Share

 

 

Date

 

May 2022 Warrants

 

 

66,666

 

 

$12.50

 

 

May 11, 2026

 

October 2022 Placement Agent Warrants

 

 

90,909

 

 

$6.88

 

 

October 31, 2027

 

October 2023 Placement Agent Warrants

 

 

117,925

 

 

$2.65

 

 

October 20, 2028

 

January 2024 Private Warrants

 

 

1,831,503

 

 

$5.46

 

 

February 1, 2028

 

January 2024 Placement Agent Warrants

 

 

91,575

 

 

$6.83

 

 

February 1, 2028

 

June 2024 Series B Warrants

 

 

1,885,632

 

 

$1.88

 

 

June24,2029*

 

December 2024 Series C Warrants

 

 

3,907,679

 

 

$0.88

 

 

December 17, 2029

 

December 2024 Series D Warrants

 

 

1,953,839

 

 

$0.88

 

 

**

 

February 2025 Series E Warrants

 

 

4,688,000

 

 

$1.00

 

 

August 12, 2030

 

 

 

 

 

 

 

 

 

 

 

 

 

* 1,624,201 shares expire on the five year anniversary following stockholder approval of the warrant issuance and the balance expire on June 24, 2029.

 

** 1,953,839 shares expire on the five year anniversary following stockholder approval of the warrant issuance.

 

 

 

 

 

Stock Options – For the three and nine months ended March 31, 2025, the Company recorded stock-based compensation related to stock options of $176,410 and $531,817, respectively. For the three and nine months ended March 31, 2024, the Company recorded stock-based compensation related to stock options of $205,176 and $615,716, respectively.

 

A summary of stock option activity is as follows:

 

 

 

Number of Shares

 

 

Weighted Average

Exercise Price

 

 

Weighted Average Remaining

Term in Years

 

 

Aggregate Intrinsic

Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding - June 30, 2024

 

 

2,263,440

 

 

$6.11

 

 

 

8.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Granted

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

Forfeited

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

Exercised

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

Expired

 

 

(14,338)

 

 

4.50

 

 

 

 

 

 

 

 

Outstanding - March 31, 2025

 

 

2,249,102

 

 

$6.12

 

 

 

7.5

 

 

$-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercisable at March 31, 2025

 

 

937,894

 

 

$10.77

 

 

 

5.9

 

 

$-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expected to vest at March 31, 2025

 

 

1,311,208

 

 

$2.80

 

 

 

8.6

 

 

$-

 

 

Stock options granted to the Company’s executive officers and employees generally vest over a 48-month period, while stock options granted to its non-employee directors vest over a 12-month period.

 

Included in the outstanding options in the table above are 418,945 and 88,911 unvested performance-based stock options granted to executive officers and other employees, respectively, which were granted in June 2020, 2021, 2022 and 2023. Grants in June 2021, 2022, 2023 and 2024 were 95,167, 60,566, 238,838 and 264,945, respectively. The performance-based stock options vest on annual performance criteria through the fiscal years ending June 30, 2028 relating to advancement of MC1r programs, including initiation of clinical trials and licensing of Vyleesi in additional countries or regions.

 

Restricted Stock Units – For the three and nine months ended March 31, 2025, the Company recorded stock-based compensation related to restricted stock units of $171,281 and $513,852 respectively. For the three and nine months ended March 31, 2024, the Company recorded stock-based compensation related to restricted stock units of $185,019 and $555,057, respectively.

A summary of restricted stock unit activity is as follows:

 

Outstanding at June 30, 2024

 

 

1,374,980

 

Granted

 

 

-

 

Forfeited

 

 

-

 

Vested

 

 

(232,941)

Expirations

 

 

(2,726)

Outstanding at March 31, 2025

 

 

1,139,313

 

 

Included in outstanding restricted stock units in the table above are 279,700 vested shares that have not been issued as of March 31, 2025, due to a provision in the restricted stock unit agreements to delay delivery.

 

Time-based restricted stock units granted to the Company’s executive officers, other employees, and non-employee directors generally vest over 48 months, 48 months, and 12 months, respectively.

 

Included in the outstanding restricted stock units in the table above are 274,549 and 59,842 unvested performance-based restricted stock units granted to executive officers and other employees, respectively, which were granted in June 2021, 2022, 2023, and 2024. Grants in June 2021, 2022, 2023 and 2024 were 22,343, 40,707, 152,432 and 184,443 restricted stock units, respectively. The performance-based restricted stock units vest on annual performance criteria through the fiscal years ending June 30, 2026 relating to advancement of MC1r programs, including initiation of clinical trials, and licensing of Vyleesi in additional countries or regions

 

In connection with the vesting of restricted share units during the nine months ended March 31, 2025, the Company withheld 54,691 shares, with an aggregate value of $99,482, in satisfaction of minimum tax withholding obligations.